Emerging-Market Investing: It's Not About the Growth

Most investors get burned—over and over—in emerging markets

IN 2012 THE ARGENTINE STOCK market plunged by 40 percent in U.S. dollar terms. Meanwhile, the stock market of Colombia rose by 30 percent. The Egyptian market rose more than 40 percent, while that of nearby Qatar ended the year in the red. Kenya's rose 55 percent, while the Ukraine's was halved.

It may be all up and down, but this, not growth, is the prime attraction of investing part of your portfolio in stocks in developing countries. Done right, such so-called emerging- and frontier-market investing can actually reduce...